CDP reports record disclosures, despite Covid-19, as corporate environmental action rises

Source: CDP, 10 November 2020

Over 10,000 companies, cities, states and regions reported data through global environmental non-profit CDP on climate change, water security and deforestation in 2020. This is the highest number of environmental disclosures CDP has ever seen, with a significant increase in the number of corporates disclosing, in particular. 9,617 companies, worth over 50% of global market capitalisation, disclosed their environmental data through CDP this year, up 14% since 2019 and 70% since 2015.

CDP reported increases in corporate disclosures across all three categories it covers: climate change, forests and water security.

The rise in corporate disclosures is a response to requests for information from 515 investors with $106 trillion in assets, and over 150 major purchasing organisations with over $4 trillion in buying power, including Airbus, Sainsburys and Nike. This demonstrates the success of the market levers CDP utilizes in driving change.

In addition, hundreds of cities, states and regions have disclosed so far this year, with CDP’s platform remaining open for these groups until the end of the year. In 2019 over 920 cities, states and regions disclosed to CDP.

This record year of disclosures coincides with CDP’s twenty-year anniversary. Founded in 2000 as the Carbon Disclosure Project, CDP pioneered environmental disclosure for capital markets. Since then, CDP’s scope has grown dramatically. From an initial focus on investors requesting climate disclosures from listed companies, CDP expanded to cover water security and deforestation, driving disclosure among a much broader group of stakeholders including private companies and local governments.

Today, CDP provides the global disclosure platform for environmental data. The data CDP collects on climate change, water security and deforestation powers the environmental data market worldwide, and is used by a wide group of stakeholders, including institutional investors, companies, regulators, governments, as well as data providers such as S&P Global Trucost, FTSE Russell, MSCI and Bloomberg.

In the near future, CDP will expand its work to cover the full range of planetary boundaries, adding Land and Oceans as well as other critical environmental themes.

Paul Simpson, CEO of CDP, said:

“We launched CDP two decades ago from a small basement office in the City of London, with the ambition of transforming capital markets to address the climate crisis. Environmental accountability was a nascent concept back then and ESG information was threadbare. Alongside a group of pioneering investors, we came up with the idea of leveraging shareholders’ influence to push companies to disclose on their environmental impact.

“I’m extremely proud of the central role CDP has played in mainstreaming environmental reporting over the years, with a critical mass of global companies now disclosing through our platform. We have seen very strong momentum this year in corporate disclosure despite the extremely challenging year we have all had with Covid-19.

“However, as we look ahead to 2030, I am acutely aware of the urgency with which we need to act, and unfortunately, the climate and ecological emergency remains. We have a choice, and if every company, investor, city and government becomes aware of the risks and prioritises taking action, we can create the sustainable future that we all want and need.”

Mary Jane McQuillen, Managing Director, Portfolio Manager, Head of ESG Investment at ClearBridge Investments, said:

“As equity managers, we view risk very seriously. Carbon is another form of risk, and the good management or prudent management around carbon emissions is something that we value. This is why we decided to support CDP as one of the first investor signatories. ClearBridge incorporates ESG analysis into our fundamental analysis. And for most portfolio companies we believe carbon disclosure is as essential as basic balance sheet and income statement items. We think this should be the case for all investors.

“Companies have also told us that investor support was key for them to proceed and move forward with environmental disclosure – another reason why active involvement is important for investors. We applaud all companies who have disclosed through CDP over the past twenty years. This is an important first step of climate action and we encourage companies to take the next step of setting science-based emission reduction targets going forward.”

In 2018, CDP integrated the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) into its disclosure platform so every company that discloses through CDP provides a TCFD data set to the market. CDP is currently collaborating with the key standards providers to support aligned and comprehensive corporate ESG reporting, and will continue to play a critical role in steering the future of ESG disclosure.